The Decline in Illegal Immigration From Mexico, and Its Implications for US Economy

Net illegal immigration from Mexico to the United States has been essentially zero and perhaps even negative, during the past few years. Is this entirely due to depressed labor markets in the US and tougher border policing, or have longer run forces also been at work? The answer is that fundamental changes in Mexico have contributed to the immigration slowdown, and these changes will continue into the future. As a result, the highly controversial American political issue of what to do about illegal immigration should become much less important in the future.

Immigration theory divides the factors determining immigration into “push” and “pull” forces. Push forces refer to conditions in the countries where immigrants come from, such as low incomes, high levels of unemployment, restricted opportunities for children, and religious, racial, and other forms of discrimination that make living there unattractive. Pull forces refer to opportunities in receiving countries, such as good earnings, jobs, and opportunities for children. Individuals migrate when the combination of push and pull forces make the expected gains from moving large enough to overcome the substantial difficulties of moving, including separation from parents, siblings, and even spouses for prolonged periods.

In all major immigration episodes, younger adults do most of the moving since they are less tied down by family responsibilities, and are more willing to take on the various risks involved in moving to another country. For many years, the net gain from moving to the US has been very high to young Mexicans with modest skills and education. The main reason has been much lower incomes in Mexico, even for persons with jobs, and jobs were more available in America since Mexico has had highly restricted labor markets. These forces encouraged millions of younger Mexicans to endure the uncertainties and costs of crossing the border illegally.

The Great Recession put a temporary end to easy availability of jobs in the United States since at the height of the recession the unemployment rate of low-skilled workers ballooned to about 16 percent. The difficulties of finding good jobs even encouraged some illegal immigrants to return to Mexico. That, along with tighter border patrols, greatly reduced the number of illegal border crossings.

Once the American economy resumes its long-term growth path with full employment (it has not been on this path for the past 4 years), the economic pull from the US should return to where it had been before the economic crisis. However, the push from Mexico has been decreasing and should continue its downward path for the foreseeable future. One important cause is the sharp decline in Mexican birth rates during the past couple of decades. Not long ago Mexico was a country with high birth rates that produced many young adults who had trouble finding jobs. Now, the Mexican total fertility rate (TFR)- the number of children born to a typical woman over her lifetime- has plummeted to about 2.25. This rate is only a little above the population replacement rate of 2.1. Unlike in the past, the number of young people in Mexico will no longer be growing rapidly over time, so that the numbers looking for work in the Mexican labor market will be on the decline.

The push from Mexico has also diminished because its economy has been growing at a good clip during the past 9 years. Excluding the large drop in 2009, the growth rate in real GDP has been over 4% per year. Mexico’s growth rate after 2009 considerably exceeds the American rate of under 2%, which is remarkable since about 80% of all Mexican exports go to the depressed American economy. One consequence is that the gap between earnings in Mexico and the United States is narrowing. This clearly reduces the demand to immigrate to America, especially under the difficult circumstances illegal immigrants face.

The US must find a way to offer a path to citizenship for the millions of illegal immigrants in the country. I have suggested elsewhere (”The Challenge of Immigration: A Radical Solution”, IEA, 2011) that the best approach is to sell the right to immigrate. Since illegal, as well as legal, immigrants could buy this right, such an approach would help solve the problem of illegal immigration.

But even if no new policies are adopted to reduce the flow of illegal immigrants, the number of new immigrants from Mexico will not return to pre-recession levels because economic opportunities are rising in Mexico, and there will be fewer young Mexicans who need to find jobs.

Gary Becker is senior Fellow at the Hoover Institute in Stanford University